Context:
Recently, National Accounts Division of the Ministry of Statistics and Programme Implementation (MoSPI) organised a half-day brainstorming session on “Conceptual Framework of Gross Domestic Knowledge Product (GDKP) Measurement.”
More on the news:
- GDPK was earlier discussed in 2021 when NITI Aayog presented a concept paper on it.
- The National Statistical Commission had pointed out then that the concept note did not provide the methodology for capturing the data and computation of GDKP.
- According to MoSPI also, GDKP fell short of specifying how it is going to supplement the GDP in measuring welfare.
About GDKP:
GDKP aims to capture the economic impact of sectors driven by knowledge, such as innovation and intellectual assets.
This would work alongside the existing Gross Domestic Product (GDP) to give a better picture of how knowledge-based sectors contribute to overall economic growth.
The idea of GDKP was propounded by Prof. Umberto Sulpasso of the University of Southern California.
The Gross Domestic Knowledge Product (GDKP) measures a nation’s growth and future through four basic pillars:
- Knowledge items (Ki) – identification of both modern and local distinct culture knowledge items in distinct categories.
- Country’s Knowledge Producing Matrix (CKPM) – comparison of knowledge produced by government, private institutions, and households as a differentiated way to impact on the GDP.
- Country’s Knowledge User Matrix (CKUM) – the value of knowledge bought by individuals and private companies as a way to measure their modernization efforts.
- Cost of Learning – similar to the cost of living to be used as a political reference for government budgeting decisions through education family bonds, education credit cards etc. to support young citizens.
Current Scenario regarding Measuring the contribution of knowledge in Indian Economy:
All expenditures on Intellectual Property Products (IPP) are currently recorded under GFCF, which serves as a key indicator of knowledge production.
- GFCF is an indicator for capital investments in the GDP dataset for the economy
- However, this doesn’t fully reflect the contribution of the knowledge economy.
The Ministry of Statistics (MoSPI) is considering creating a satellite account for the knowledge economy, similar to accounts used for sectors like tourism and culture.
- Satellite accounts give detailed insights into specific areas that GDP doesn’t cover well.
The government plans to set up a technical committee to assess and guide the development of the GDKP.
- The aim of it is to create a framework that accurately measures how knowledge sectors contribute to India’s economic growth.